Daily commentary

The market is opening up a bit weaker this morning.  The broad driver of demand with little supply to fill it remains in tact.  However, spreads are reacting this morning to weaker European equities, wider swap spreads and lack of clarity about government intervention.  Stocks and spreads have both rallied like a banshee for the last few days so this could be a 'breather'.  

With regard to the demand mentioned above, JPMorgan notes that natural demand (from maturing bonds and coupons being paid) is ~$75B a month.  As I've mentioned recently, our market is currently seeing heavy crossover demand from equity managers.    In addition, AMG is showing heavy flows into bond mutual funds.  In fact, high yield has seen 5 consecutive weeks of inflows for the first time since May '08.  With only $41B in supply MTD, you can see why spreads are rallying.  I'm told supply will start to pick up soon.  Watch NIM3 on Bloomberg for recent issuance.

Earnings continue to roll in....ex finance, they seem to be about flat vs Q4 '07 which is not a bad thing at all.

I've noted several times that the slope of credit curves matter.  I'd like to point out that 2 well known issuers in Europe (KPN and Nokia) both brought new issues recently with positively sloped curves which is encouraging.

Ford noted during earnings that it tapped it's revolving line of credit.  Not that long ago, that would have absolutely panicked the credit markets as that's often viewed as a death knell.  However, since autos have been downgraded virtually out of existence, they've lost their ability to shock.

Today's 'gee whiz' Bloomberg function is IMAP which gives you a quick easy graphical overview of the global equity markets daily performance.  It's simple to click through to see sectors or geographic regions.